Here’s why you should file your ITR even when you do not have tax liability

The last date to file Income Tax Return (ITR) for the financial year 2022-23 is 31 July 2023. However, there is a common notion that individuals who do not have a tax liability need not file ITR. You will not have to pay any tax when your income from all sources is below Rs.2.5 lakhs when you are below 60 years. When you are above 60 years, you do not have to pay tax when your income is below Rs.3 lakhs.

However, you must file your ITR in certain cases, even when you do not have a tax liability. Below are the instances where you should file your ITR.

Your salary income may be below the tax exemption limit, i.e. below Rs.2.5 lakhs. But if you have invested in equities, mutual funds, bank fixed deposits, etc., your income may exceed the tax exemption limit. In such a case, you need to file your ITR.

Similarly, when your income is below the tax exemption limit, and TDS has been deducted from your payments, you must file ITR to get the money through an ITR refund.

Your income may exceed the tax exemption limit of Rs.2.5 lakh, but you may not have a tax liability due to various deductions and rebates. In such cases, you will have to file ITR. For example, your income may be below Rs.5 lakhs, and you do not have any long-term capital gains. In such a case, you do not have tax liability due to the available rebate under section 87A, but you still need to file ITR.

When you are a resident and have a beneficial interest in a foreign asset, whether movable or immovable, you should file an ITR. You should file ITR when you have gone outside India and opened a bank account, and returned to India without closing it, even when it has a negligible balance.

When you have invested in bonds, shares or mutual fund units of foreign companies, you should file ITR. Employees having ESOPs of holding companies of their Indian employers should file ITR.

When you have Rs.1 crore or more in your current account or Rs.50 lakh or more in your savings account in a single financial year, you should file your ITR even when you do not have a tax liability. Similarly, if tax deducted from your income exceeds Rs.25,000 in a single financial year, you should file ITR. If you are a senior citizen, the tax deduction limit is Rs.50,000.

When you are engaged in a business, and your turnover exceeds Rs.60 lakh, or if you are engaged in a profession, and your turnover exceeds Rs.10 lakh in a financial year, you should file your ITR.

If you have paid more than Rs.2 lakh for foreign travel, you must file ITR. Even if you pay for foreign travel of a person who is not your family member, you should ITR. If you have incurred expenses on electricity over Rs. 1 lakh, you must file your ITR. For this purpose, the electricity connection doesn’t have to be in your name. Thus, even if you are on rented premises and have paid more than Rs.1 lakh for electricity charges during the financial year, you must file ITR.

For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@clear.in